I’m studying for my Accounting class and need an explanation.
Vertical and Horizontal Analysis
1.You are to start by building in Excel the year end 2017 and 2018 Income Statement and Balance Sheet for your hospitality firm based off the company’s 10-K (If there is a 10-KA must use that). All statements should have account names first than the 2018 numbers in the second column and 2017 in the third column. No other years will be accepted without prior approval. If your company does not do a calendar year end (or within 1 month of the year end) you must come see me or email me what their year-end is and get approval.
2.The Income Statement must have subtotals for Total Revenue, Total Operating Expenses, Operating Income, Income Before Taxes, and Net Income at a minimum. You may have more subtotals based on the company’s financial statements but you MUST have these 5 at a minimum. You must include all subtotals off the 10-K in addition to these stated. All subtotals must be formulas and not hardcoded numbers. If you believe your company financials do not have these subtotals you must check with the professor for a variation to this requirement. Anything turned in without these will be penalized points. If you do not know what a subtotal should include do not ignore it, come to office hours to ask.
Only go to Net Income or Net Loss. If your company has multiple Net Income/(Loss) lines due to subsidiary companies and such, go all the way to the last one right before earning per share. Do not include any Earnings Per Share information or additional information below that.
3.The Balance Sheet must have subtotals and totals for Current Assets, Long-term Assets, Other Assets, Total Assets, Current Liabilities, Long-term Liabilities, Total Liabilities, Total Stockholders’ Equity, and Total Liabilities and Stockholders’ Equity at a minimum. More subtotals may be added based on the company’s financial statements but you MUST have these 9 even if the company does not show these subtotals. You must include all subtotals off the 10-K. All subtotals and totals must be formulas and not hardcoded numbers.
4.You are to do a horizontal and vertical analysis for each statement. You are to do all vertical and horizontal analysis possible given that you only have 2 years of data. Do not do any more years.
Balance sheet and income statement are on pg.46